Charge-up or fixed price?
Building a new home? Charge-up vs fixed price Contracts – what you need to know.
When you’re planning to build a new home, an important decision you’ll face early on is choosing the right type of building contract. At Tailored Builds, we offer two flexible options to suit your project: charge-up (or cost-plus) contracts, and fixed price contracts.
Understanding and considering the difference between these two approaches can help you make a more informed choice, and ensure your build project runs smoothly from start to finish.
What Is a Charge-Up (or cost-plus) Contract?
Fair, flexible & transparent
A charge-up contract, also known as a cost-plus contract, means you pay for the actual cost of building your home—plus an agreed margin.
With charge-up you pay for exactly what’s being done—no hidden costs, no unnecessary mark-ups. We agree on hourly rates, a fair profit margin, and overheads upfront. You cover the actual costs of materials and sub-contractors, with a clear and detailed breakdown of expenses. There’s no mark-up on labour, just on sub-contractors and suppliers.
You’ll get an estimate before we start, plus regular updates, so there are no surprises. A lot of clients prefer this option because it’s fair for both parties - no inflated pricing, just honest work at a reasonable rate. Our team is dedicated, organised and efficient, so you can trust that your money is going towards genuine progress.
Pros of Charge-Up Contracts:
Flexibility: Easily make changes or upgrades during the construction process.
Potential Savings: You benefit if actuals come in under the estimated costs.
Collaborative Process: You remain actively involved in option and budget decisions as the build progresses.
Transparency: You receive detailed invoices, so you know exactly what you’re paying for.
Cons of Charge-Up Contracts:
Uncertain Final Cost: If unforeseen issues arise, the total price may change.
Active Management: You’ll need to keep track of costs and invoices regularly.
Trust is Key: Success relies on open communication and a reliable builder (which we pride ourselves on at Tailored Builds).
What Is a Fixed Price Contract?
Certainty upfront
A fixed price contract locks in the total cost of your home build before construction begins. This price includes all materials, labour, and construction services based on a set of approved plans and specifications.
Fixed price gives you peace of mind with a set cost from the start. This means you know exactly what to expect, without unexpected costs along the way—unless changes are made to the scope of work.
It’s a great way to stay in control of your budget while ensuring your home is built to the highest standard. At Tailored Builds, we keep pricing fair by applying margins to trade rates, not retail prices, ensuring you get the best value we can offer.
Pros of Fixed Price Contracts:
Budget Certainty: You know the full cost upfront—beneficial for financial planning and peace of mind.
Less Administration: less need for ongoing cost monitoring.
Preferred by Lenders: Banks can favour fixed price contracts when approving construction loans.
Cons of Fixed Price Contracts:
Limited Flexibility: Changes after signing can lead to variation fees.
Built-In Risk Margins: Builders usually need to include contingency allowances in the price to cover unexpected issues.
More Planning Time: More detailed design and pricing work is required before building begins.
Which Contract Type Is Right for Your Home Build?
The right choice depends on your priorities. If you value budget certainty, a fixed price contract may suit you best. If you want greater control and flexibility, a charge-up contract might be more appropriate.
At Tailored Builds, we guide you through both options so you can choose the one that best fits your needs. Whether you’re building your first home, a holiday home, or an architectural masterpiece, our experienced team is here to make the process simple, transparent, and tailored to you.
Partner with the Experts in New Home Builds – Tailored Builds, Rotorua
Looking for reliable, experienced builders in Rotorua? At Tailored Builds, we offer flexible building contract options, honest communication, and expert craftsmanship. Whether you choose a charge-up contract or a fixed price contract, we’ll deliver a home you love, on your terms.